Intel (INTC) Stock Looks Like A Strong Buy Heading Into 2019
Zacks Investment Research | Dec 12, 2018 06:00AM ET
Shares of Intel (NASDAQ:INTC) have popped over the last few months on the back of a solid third quarter. Plus, the chipmaking powerhouse’s Q4 and full-year projections look strong. So, let’s see why Intel stock looks like a strong buy as we head into 2019.
Overview
At this point, the delay of Intel’s next-generation chips has grabbed a ton of attention, while also helping the likes of Advanced Micro Devices (NASDAQ:AMD) and other Intel competitors. With that said, interim CEO Robert Swan did note on the company’s third-quarter earnings call that it is “on track for 10-nanometer-based systems on shelves during the holiday 2019 selling season.”
Wall Street will of course closely monitor Intel’s progress on its 10nm products. Still, even without its latest chip offerings, the company’s Q3 revenues surged 19% to reach $19.16 billion. This beat our expectation and marked an all-time company record. Plus, Intel’s IoT and Mobileye (F:0ME) autonomous vehicle divisions both posted record revenues.
Price Movement
As we touched on at the top, shares of INTC have jumped 5.5% over the last three months, while the S&P 500 slipped nearly 9%. Despite this recent climb, shares of Intel closed regular trading Tuesday at $47.38 per share. This marked an 18% downturn from its 52-week high of $57.60 per share and sets up what could prove to be a solid buying opportunity for those high on Intel.
On top of that, investors will notice that INTC stock has outpaced its direct peer group’s average—which includes Nvidia (NASDAQ:NVDA) and Texas Instruments (NASDAQ:TXN) —over the past few years.
Outlook & Earnings Trends
Moving on, Intel’s fourth-quarter revenues are projected to jump 11.5% to reach $19.01 billion, based on our current Zacks Consensus Estimate. Plus, the chipmaker’s full-year revenues are expected to climb 13.5% to reach $71.2 billion.
Meanwhile, Intel’s adjusted Q4 earnings are projected to surge roughly 13% to reach $1.22 per share. Better yet, INTC’s adjusted full-year earnings are expected to soar 31%. Maybe more importantly, Intel’s earnings outlook has turned far more positive recently as the charts below show us.
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Bottom Line
Intel is currently trading at 10.3X forward 12-month Zacks Consensus EPS estimates, which represents a discount compared its industry’s 13.1X average and the S&P’s 15.8X. Better yet, INTC stock has traded as high as 14.8X over the last year alone and rests below its five-year median of 13.3X and right above its five-year low of 10X. Therefore, Intel’s valuation picture looks pretty attractive at its current level.
Intel is a Zacks Rank #1 (Strong Buy) at the moment based, in large part, on its recent earnings estimate revision trends. The company is also a dividend payer that rests well below its 52-week high.
Therefore, investors might want to consider Intel stock heading into 2019 with the company currently projected to report its Q4 earnings results on January 24.
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